Valley View: The speech I'm waiting to hear

Who really calls the shots at a high-tech company? The CEO? Chairman? Board of directors?

Who really calls the shots at a high-tech company? The CEO? Chairman? Board of directors?

Perhaps. But to a large degree, their decisions today are being dictated by a small group of financial analysts who have the power to add or subtract billions of dollars from a company's market capitalization.

Failing to meet the earnings expectations of these analysts -- by even a penny a share -- brings swift and devastating punishment to the company's stock price.

More often than not, top executives are finding themselves asking, "What would (insert name of analyst) think about this?" before making a move.

I was reminded of this last month at the J.P. Morgan H&Q Technology Conference, held in San Francisco. During one session, the chief financial officer of a prominent chip maker told the assembled analysts about recent cutbacks his company made in the wake of falling orders and sales.

This executive lamented the layoff of 200 engineers, some of whom were designing the company's next generation of circuits. The cutbacks were "very painful," he told the analysts. "These guys are so precious, their skills are so precious."

I felt like raising my hand and asking, "Then why did you fire them?" But I already knew the answer. The layoffs were made to satisfy the people sitting all around me, who surely would have punished the share price of the company's stock had the cutbacks not been made.

As I was driving back from the conference, I started daydreaming about a speech that I'd love to hear at some future conference of this type. The CEO climbs the podium, adjusts the microphone, and begins speaking to the sea of upturned faces:

"Ladies and gentlemen, as we announced this morning, our company is experiencing a sharp decline in orders because of the industry slowdown. As a result, our revenue for this quarter will fall far short of our expectations, and yours.

"We're taking prudent steps to reduce our costs to respond to this situation. We've eliminated unnecessary travel and other discretionary spending. And I've ordered that the salaries of our top executives, including my own, be cut until the economy improves.

"However, there will be no mass layoffs at our company. In particular, no chip designers will be fired. These guys are just too darned hard to find, and we have to keep them on board so that we'll be ready to respond when the industry turns around.

"Now, I realize this will disappoint most of you. I imagine that most of you will cut your profit forecasts for us and downgrade your ratings for our stock. That will be unfortunate, but it won't change my decision. I've already gotten my board of directors behind me on this, and they've assured me I won't lose my job, even if our stock price tanks. I will now answer your questions, ladies and gentlemen."

Dreams can come true. Any takers out there?

Robert Ristelhueber is managing editor of EBNOnline. E-mail comments to rristelh@cmp.com